Wednesday, December 11, 2013

E.I.T.C. v. "moderate" minimum wage = too little v. too late

According to minimum wage critic David Neumark, $55
billion is transferred
yearly to poor families by the E.I.T.C. -- and that says it
all. That represents about a third of one-percent of our
$16 trillion economy.

That closely equates a minimum wage raise of $1 an hour
-- which would shift about $40 billion out of our $16 trillion
-- or about a quarterof one percent of overall income
-- from the 85-90% who earn more than $8.25 an hour to the
10-15% below (I don't have exact figures here).

The bottom 20% of
earners now take 2%
of overall income -- big help. Neither path offers much hope of lifting working families out of poverty.
The E.I.T.C. does not even pretend to help the single worker.

A $15 an hour minimum wage OTH would shift about $560
billion from the 55% who now take 90% of overall income
to the 45% of Americans who take only 10% -- or about 4%. I don't foresee the
55% tellling the 45%: Stay home; we don't need
your output anymore, over a 4% overall price increase.
* * * * * *
It occurred to me recently -- after reading a very
pro-minimum wage raise piece in the NYT -- that most of
of today's pro-raise pieces could have been written in
January 1967, when the potential minimum was near $11
an hour (as we know from history) -- but when per-capita
output was about h-a-l-f today's (to be precise,
that would be if the minimum were $7.25 in 1967 January
rather than $8.75).
* * * * * *
A $15 an hour minimum wage would not have been
"feasible" in 1956 – when economic output per American
was only 40% of what it is today – when (Senate Majority
Leader) LBJ's minimum wage was $8.50
an hour. $100 an hour minimum wage should actually,
literally be "feasible" ("feasible" is the operative
word for this whole essay), in something like 100 years
– if productivity goes on doubling every 40 or 50 years.

It was "feasible" to raise the federal minimum wage from
$8.50 an hour in 1956 to almost $11 an hour in 1968
because overall productivity – not the minimum wage
workers’ productivity – grew 25%. Barbers get paid more
in France than barbers get paid in Poland because France
has a lot more money to pay barbers with.

A $15 an hour federal minimum wage need not be sold on
humanitarian – nor least of all welfare – grounds. It
can be sold on the simple premise that the free market
is ready and willing to bear it – on the simple basis
that it is "feasible."

About Me

In 1944 I arrived on earth (if from somewhere else in the universe, those memories have been erased for security reasons).
For more: http://ontodayspagelinks.blogspot.com/2008/09/my-more-complete-profile.html